Sun Microsystems announced about a week ago a new microprocessor that it boasts to be â€œthe worldâ€™s fastest.â€ The new processor, officially named UltraSPARC T2, is the successor to the companyâ€™s UltraSPARC T1 â€“ with several improvements and architectural changes.

The UltraSPARC T2, formerly codenamed Niagara 2, is an eight-core, 64-thread microprocessor that will reach the server market later this year. The new chip includes a 4MB L2 cache, two on-chip 10 Gbyte Ethernet ports, and each core pipeline will have its own integrated FPU.

According to Sun, the new UltraSPARC T2 processor offers twice as much performance per watt was the UltraSPARC T1 and 10 times the floating point computational power.

The new chip is also designed to excel at virtualization. The UltraSPARC T2â€™s ability to run up to 64 applications simultaneously on a single processor is an attractive feature for IT departments looking to simplify their data centers.

“The combination of Solaris and UltraSparc is a very powerful virtualization platform,” said Fadi Azhari, director of marketing for Sun Microelectronics. “We believe it’s unequal in the industry.”

Sun has also kept an eye on processor efficiency. The new chip is to consume less than two watts per thread, adding up to around 120 to 130 watts for the entire processor. For the basis of comparison, the a quad-core Intel Xeon processor requires 30 watts per thread.

Although the UltraSPARC T2 will definitely power many of Sunâ€™s servers later this year, the company has many other plans for the chipâ€™s applications. Different versions of the chip, perhaps with fewer cores or lower power consumption, may be usable in networking hardware, set-top boxes, or even automobiles.

“We don’t want to limit ourselves to the server market. The server market won’t grow nearly as fast as the storage or networking market,” Jonathan Schwartz, Sun’s CEO, said in an interview. “While we are making them, we might as well make them general purpose enough to sell them to the broader market.”

The full-featured chip is expected to cost below $1,000, though scaled-down versions will cost less for more simple applications. Schwartz said that the company is already speaking to potential network and storage partners on adoption of the UltraSPARC T2.

“Sun is entering the merchant silicon business and by that we’re going to be chasing the commodity volume markets which are not simply limited to the market place for server computers,” added Schwartz.